Stalling Profits Behind Recent Cable and Satellite TV Blackouts

The recent blackouts involving DISH Network, which dropped AMC Networks channels, and DIRECTV, which is in a dispute with Viacom costing customers popular channels like TV Land, MTV, VH1, Comedy Central and Nickelodeon, are a direct result of the stalling profits of providing cable TV and satellite TV in this day and age.

According to a CBS News report quoting research from the Leichtman Research Group, the rising number of disputes is the result of the stagnant market for pay television; namely, new households are not forming in these economic times, and those households who want to pay for TV already do. Around 101 million American homes subscribe to cable television or satellite television, which is about 87 percent of homes; this number has not changed since 2009.

Even so, many major cable and satellite TV providers have been able to increase profits from 15 cents on the dollar to 19 cents on the dollar between 2009 and September of 2011. Since then, though, profits have stayed the same, while profits of the media companies like Disney, AMC Networks, and News Corp. who provide the channels cable carriers bring into the home have continued to grow. Disputes like the one between DISH and AMC and DIRECTV and Viacom are largely because of the fact that the media companies are not sharing that profit increase with the distributors who bring their shows into 101 million American homes.

In fact, there have been 22 fee disputes that have caused channel blackouts in America this year, up from 15 in all of 2011 and just four in 2010.

While the disputes between DISH and AMC and DIRECTV and Viacom will likely be resolved quickly, the fact of the matter is that these disputes will continue as the margin between the profit garnered by the media companies and the profit garnered by the cable and satellite TV providers continues to grow.

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